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When Less is More: The Impact of the Regulation on Standard Workweek on Labor Productivity in South Korea
Author(s) -
Park WooRam,
Park Yoonsoo
Publication year - 2019
Publication title -
journal of policy analysis and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.898
H-Index - 84
eISSN - 1520-6688
pISSN - 0276-8739
DOI - 10.1002/pam.22136
Subject(s) - productivity , economics , stock (firearms) , labour economics , total factor productivity , sample (material) , working hours , demographic economics , economic growth , engineering , mechanical engineering , chemistry , chromatography
This paper examines the impact of a workweek reduction policy on the labor productivity of manufacturing plants in Korea. Taking advantage of the stepwise introduction of the standard 40‐hour workweek in Korea, we apply a difference‐in‐differences framework to individual‐level cross‐sectional and plant‐level longitudinal data to examine the impact of the policy on working hours and output, respectively. We find that the policy reduced per‐worker hours but increased per‐worker output, which is robust to various specifications and sample restrictions. The observed increase in per‐worker output is likely to be mediated through the increase in the total factor productivity and the amount of capital stock.